1031 EXCHANGE PROCESSING

Ensuring a Secure Exchange

Secure Exchange Facilitation

Ensuring that your exchange is facilitated and processed within an encrypted environment means that your personal and transactional data is never at risk because it is electronically secured. It also means that your access to your exchange related data and trust account balances will typically only be available via login credentials which are required for you to view your exchange inforrmation.

Encryption is the backbone provided by the Qualified Intermediary that protects you and your data:

Encryption in transit - Encrypt all data as it moves between the QI servers and your web browser. With an API that is fully encrypted so every request to view or update your records automatically encrypts that data behind the scene.

Encryption at rest - Encrypt all data that's stored. This includes both the records stored in the QI databases and search indexes as well as any files and images you've uploaded to the database.

Bank-level Encryption - Insist upon both SHA-256 and AES-256 encryption, the strongest encryption available. This is the same level of encryption that banks use.

Protecting Your Transactional and Personal Data

Personal Data Security

The online world in which we live today can be dangerous. Especially for those involved in the sale and transfer of real estate. Your personal data is always at risk of being hacked or compromised, and it is even more risky to allow the transport of your personal data across free email platforms like Gmail and Yahoo.

Frankly, this is one of the primary rationales we utilize whenever we refer an Exchanger to any Qualified Intermediary. We encourage every Exchanger to insist that their exchange is processed within a fully encrypted environment, to ensure that no data is ever at risk. That is also why we will refer you to a processor that will set up your account and securely send you login credentials, so you can log in to a secure ecosystem where you can safely interact with your exchange documents, view your trust account activity, or communicate with your 1031 Coordinator.

Absolute Funds Security

The Security of Exchange Funds

For many years, Qualified Intermediaries commingled the exchange proceeds of their Exchangers and provided for the sub-accounting of individual Exchanger balances on their own books. Over time, as banking software became more sophisticated, it was possible to set up individual accounts for the benefit of Exchangers (FBO), however the accounts were always in the name of the Qualified Intermediary and never required the approval of the Exchanger to transfer and exchange funds.

One step forward for 1031 Exchangers was the introduction of Qualified Escrow Accounts or QEAs. This is essentially a three-party agreement between the bank, the Intermediary and the Exchanger which ensures that a bank officer must sign off for the transfer of any 1031 funds. This was a dramatic step forward for Exchangers, but has been utilized very rarely because of the traditional extra expense of setting up the individual QEA at the bank.

If an Exchanger does not opt for the extra expense associated with a Qualified Escrow Account they should insist upon a Qualified Intermediary who uses a banking structure that can be trusted. We encourage the use of Qualified Intermediaries with a banking regimen where they actually set up each individual Exchanger's account in their name, and with their tax identification number. This makes it very clear who's exchange funds are on deposit and also requires that every Exchanger must provide written disbursement instructions, usually provided through secure e-signature for the wiring or movement of any 1031 funds.